Ishac Diwan

World Bank

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Institutional Affiliation: Harvard University

NBER Working Papers and Publications

March 1992Debt Reduction, Adjustment Lending, and Burden Sharing
with Dani Rodrik: w4007
We argue that the disincentive effect of a debt overhang is generally small and consequently that debt reduction does not lead to important efficiency gains on this account. Instead, we develop a framework that highlights the inefficiency created by the liquidity constraint faced by over-indebted countries. Often, adjustment/investment opportunities that are profitable at the world interest rate cannot be undertaken for lack of sufficient funds. New creditors are deterred from investing as they expect to be 'taxed" by the old creditors who stand to gain disproportionately. This leads to an inefficient situation when a class of new creditors have a comparative advantage relative to the old creditors. We focus on the time inconsistency introduced by the shortage of liquidity. New (unconditio...

Published: External Debt Adjustment and Burden Sharing: A Unified Framework, Princeton Studies in International Finance, 1992

May 1989Patents, Appropriate Technology, and North-South Trade
with Dani Rodrik: w2974
We consider the differential incentives of the North and the South to provide patent protection to innovating firms in the North. The two regions are assumed to have a different distribution of preferences over the range of exploitable technologies. Due to the scarcity of R&D resources, the two regions are in potential competition with each other to encourage the development of technologies most suited to their needs. This provides a motive for the South to provide patent protection even when it constitutes a small share of the world market and hence has strong free riding incentives otherwise. A benevolent global planner will set equal rates of patent protection only when it weights the welfare of the two regions equally. We find that the comparative statics of the Nash equilibrium exhibi...

Published: Journal of International Economics, February 1991. citation courtesy of

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